A Taxing Recruiting Problem

When a surefire recruiting method dries up in a tight labor market, imaginative CEOs can still find good workers. Witness Chuck McCabe. For years, the owner of Peoples Income Tax, in Richmond, Va., had relied on offering tax-preparation courses to find employees for his company. Like many other tax services, the company ran courses every fall and then hired the best grads. But last September, to McCabe's dismay, only a meager group of students enrolled.

So just a week before classes were to begin, he wrote to all 10,000 of his company's former clients, offering to waive the course's $149 tuition. "It was just a shot in the dark," he says. But his clients were financially savvy enough to know a good deal when they saw it. They filled 63 of the 101 slots in the fall classes. Of McCabe's 24 hires for the 2001 tax season, 20 ended up being former clients.

Even though McCabe took in about $2,000 less in tuition revenues than he usually does, he figured that recruiting former clients was more cost-effective than enticing new people to take his courses. "We spent several thousand dollars on advertising, and we ended up with only four employees who were not our own prior clients," he says. "We will certainly rethink our strategy for the future."